Brazilian assets rally after Bolsonaro leads first round

Brazilian stocks and the real rose sharply in early trading on October 5 after Flávio Bolsonaro led President Luiz Inácio Lula da Silva in the first round of the presidential election. The rally followed a result that sent the candidates to an October 25 runoff, with neither securing an outright majority. With more than 99% of votes counted, Bolsonaro received about 47% and Lula about 45%, according to reported results. The Ibovespa, Brazil’s benchmark stock index, climbed more than 8% at one point in early trading. The Brazilian real also strengthened against the U.S. dollar, though reports gave differing estimates of the move, from 1.4% to more than 4%. The available accounts do not establish comparable measurement windows or baselines for those figures. Investors and analysts attributed the market response to expectations that a Bolsonaro administration could pursue tighter public spending, fiscal adjustment and other market-oriented reforms. Bolsonaro has campaigned on reducing government spending and taxes.